Troubling Trend Continues in Labor Force Across America

The U.S. economy has become something of a riddle in the last few years. Inflation remains a big concern and consumer confidence is down. But the stock market is on an upward trajectory and unemployment looks relatively stable.

Look closer at the employment numbers, however, and there is a bigger trend: People are leaving the labor force in large numbers.

The American Communities Project looked at county-level jobs data from the Department of Labor comparing June 2026 with June 2025, and the unemployment rate indeed looks pretty flat. But in the same time period, the number of people in the labor force and the number employed declined by more than 1.2 million people.

Those drops in the labor force and the number employed happened in all 15 community types.

The numbers raise more questions about an economy that seems to be following different patterns than it has in recent years, as we have noted on this site.

The Numbers

Overall, the unemployment data look pretty unremarkable. The unemployment rate is up in 11 of the 15 community types, but not by much — between .02 and .28 percentage points.

But the labor force and number of people employed data are more striking, in part because the trend is uniform, even though many of these community types revolve around very different economies. The sparsely-populated, ag-driven Aging Farmlands saw a decline of 5,300 employed, while the densely-packed, industrial Big Cities saw a drop of more than 438,000. That’s about a 1% decline in each.

The “labor force” is the number of people age 16 or older that are actively looking for work. A decline in this number is often seen as a sign of a weak job market — or a market weak enough that workers are discouraged from looking for work. That decline was 1.24 million when comparing this June with last June.

The number of people employed is a simple tally of the number of people age 16 or older who have worked at least 15 hours in the last week. From June to June, the number of employed people declined by 1.25 million, even as the unemployment rate stayed fairly steady.

(County-level unemployment data are not “adjusted” to account for seasonal shifts in job numbers, so the best way to measure them is using the same month year-over-year.)

To be clear, these drops are not uniform within each type. That is to say, some Big Cities, Urban Suburbs, and Aging Farmlands grew their labor force and employed numbers, but many more did not. This was true across all 15 types. Nationally, counties that lost labor force and employed people outstripped those that grew by about a 2-to-1 margin.

A Larger Meaning

In a way, these numbers feed the larger narrative of an economy that is difficult to understand.

The ACP’s work partly focuses on how different communities can be very different places, and experience diverse economic realities. Some are more driven by manufacturing, some more by service jobs, some by government work.

The fact that all the community types are seeing declines suggests something broader happening in the U.S. economy — something broad enough to touch every kind of place, such as a larger economic slowdown.

To be clear, the data do not show a recession. GDP growth, while somewhat lackluster, is still positive.

Yet, these June data from the U.S. Labor Department are not an outlier. They are more confirmation of a trend visible elsewhere.

A recent New York Post story noted that 832,000 workers left the labor force in June. And the national labor force participation rate was at 61.5% in June, the lowest that figure has been since 1976 (excluding the job crash during the Covid pandemic). That’s a number from an era before women were fully integrated into the workforce.

So, what’s driving these numbers?

One theory is younger people, particularly men, are having a hard time getting good jobs and just no longer looking. A study from Indeed projects the labor force participation number is going to continue to decline through 2034 and “workers ages 16 to 24 are the largest contributors to the overall decline.”

That fits anecdotally with reporting about discouraged college grads in the United States walking into a job market defined by tighter prospects. Some of this is being driven by employers navigating an uncertain environment and, to some extent, the rise of artificial intelligence.

Implications

Regardless of the driver or drivers, the numbers here are real and they are likely to have effects politically and culturally.

There were more than a few analysis pieces written after the 2024 presidential election on how Donald Trump had improved his standing and the GOP’s standing with young voters, creating a potential generational shift in the politics. Polls have since shown that trend has reversed, sharply. These job numbers may be part of the reason why. Exit polls showed that the economy and inflation were the top issue for voters, and neither have markedly improved.

But beyond politics, there are potential long-term impacts of a generation emerging into a tough job market and deciding not to enter it. Lifelong earning potential tends to suffer. Having fewer employed people also generally means less spending. It’s hard to have disposable income if you don’t have any income.

And that’s where the ACP’s types could be an interesting tool for analysis. It’s hard for anyone to be unemployed when they want a job, but the larger impacts can vary greatly depending on education or the safety net around you. Having family around through tough times can be an asset or a crutch.

It’s something we will be watching closely in the months ahead.